There have been many cases construing the meaning of the HCQIA since its
passage. There has been nothing surprising in these cases, the act is clearly
written and has few ambiguities. The main issue has been the standard to
judge the intent of the peer reviewers. Because the statutory title of the act is
Chapter 117, Encouraging Good Faith Professional Review Activities, it was
initially assumed only peer review done in good faith would be entitled to
immunity under the act. The courts have found that the actual text of the act
does not use a good faith standard, but an objective standard. [
Wayne v.
Genesis Med. Ctr., 140 F.3d 1145 (8th Cir. [Iowa] 1998).] This means that if
the reviewing committee follows the procedures of the act, they are immune
from damages even if they conducted the peer review in bad faith. Conversely,
if the procedure is sufficiently flawed, it will not come under the act even if
conducted in good faith.. The objective standard makes it much easier to know
that a peer review process will be protected, even if some members of the
committee have hidden motives.

The act’s immunity is important if the jury finds that the peer review action was
taken in the reasonable belief that it would further the quality of medical care
but nonetheless violated a federal law. This might help when physicians on the
peer review committee violate other laws but conduct the peer review
properly. For example, assume that the physicians on the committee were
engaged in anticompetitive activities that do not concern the practice of the
physician they are reviewing. If they conduct a proper peer review activity, the
act might prevent an aggrieved physician from alleging that the peer review
action was tainted by the racketeering activities.

A more interesting question is whether the act would allow peer review
activities designed to improve medical care by reducing competition. For
example, specialty surgeons must get several cases of an unusual condition to
keep their skills keen. If competition between two surgeons denies both the
necessary level of cases to maintain their skills, this will adversely affect the
quality of medical care in the community. It might be appropriate for a peer
review committee to consider the adequacy of the patient base when granting
or renewing a specialist’s hospital privileges. The act, however, defines these
considerations as per se improper:

“Action is not considered to be based on the competence or professional
conduct of a physician if the action is primarily based on— … [any] matter that
does not relate to the competence or professional conduct of a physician.”

Thus, if the specialty surgeons were still competent (before competition
reduced their skills), the act seems to forbid peer review actions necessary to
maintain that competence. Once the competition had reduced the surgeons’
competence, the committee might be able to act to reduce competition. At this
point, however, it might be impossible to justify penalizing one surgeon to the
benefit of the other. This also may affect the general issue of the hospital’s
using medical staff privilege decisions to shape the package of services it offers.